Identifying Challenges Of Doing Business In Mexico

Countries will present different levels of difficulty to conduct business. There are countries that welcome foreign business and make it easy for them to set up shop and others that lag behind in making things easy for foreign business owners. In our opinion, Mexico would be in the middle.

Mexico welcomes foreign business but not always has the best processes to make it easy to open a subsidiary. In our experience, these are some of the common complications foreigners find when trying to open their business in Mexico.

 

Slow bureaucratic processes  

When incorporating a company in Mexico, you should expect a period of time no shorter than 1-2 months. After defining your act of incorporation, including the objective of the company, its shareholders and other corporate clauses, the notary public will review this information. Then, he will request 3 possible names for the company, which will be requested before the Ministry of Foreign Relations. After authorizing one of the three names, then the company can solicit its tax- payer registry, which also has additional requirements, such as a legal address and a legal representative. Foreign shareholders should also be registered before the Ministry of Economics.

 

Few banks

Once the company has obtained its incorporation act and its tax-payer id (RFC in Spanish) it must immediately start opening a bank account, which it will use not only to collect its sales and pay its expenses, but also to pay taxes. This could sound easy in some countries, but in Mexico, it could be even more troublesome than the government processes. Mexico has no more than 35 operational banks, with less than 10 serving the whole country. This lack of competition has created inefficiencies and bureaucratic processes within the banks. Furthermore, Mexico is naturally vulnerable to illegal activities regarding money laundering, so banks are excessively cautious when opening bank accounts. You have to be patient; it helps to have someone, known to the bank, assist you in explaining the nature of the business so that the bank acts more swiftly to open the bank account.

 

Language

While English is the international language for business, Mexico (and Mexicans) still lag in this field. It is not uncommon to find staff with experience in a certain industry but without the English language capabilities. And even if you find staff that have conversational English, they will hardly have business English, so you should consider some English training to operate smoothly in the future.

 

Distance

Finally, there is a distance between the two countries. Despite having ample travelling options and communication tools, distance will make things difficult to foreigners who want to conduct and control their business in Mexico. Mexican workers are used to having supervisors; somebody monitoring their work, and to share responsibilities. When left to work on their own, companies should consider a transition period, a time for learning accountability, self confidence and trust. Training is imperative, to let staff know what is expected from them.

 

An accounting firm with experience in assisting foreign corporations open their subsidiaries in Mexico can help you through this troublesome process. It can represent your interests while the Mexican business takes off and gains more structure. The accounting firm can help you start on the right foot. Once operating, it can help with several routine processes such as bookkeeping and payroll, ensuring legal compliance. Or else, an external auditor can review the subsidiary’s financial statements to increase its reliability when reporting to the holding company

Finding support from the right expert at the beginning of a business project in Mexico increases its probability of success.

 

If you would like to explore the support you can receive when opening a company in Mexico, feel free to contact us by making click below